CFAS SELF-REVIEWER (PAS 40) 8.

What happens when an undertaking decides to

dispose of an investment property without
1. An entity has a factory which due to a decline development?
in activity is no longer required and is now a) It is reclassified as owner-occupied
being held for sale. Is this an investment b) It is transfer to inventory
property? NO c) It continues to treat the property as an
investment property
2. Which TWO of the following disclosures must d) None of the above
be made when fair value model is adopted?
a) Net gains or losses from fair value 9. Which of the following does not define
adjustments investment property?
b) Useful lives or depreciation rates used a) Property that's held for capital appreciation
b) Property held to earn rentals
c) The amount of impairment losses
c) Property used in the production or supply of
recognized goods or services
d) Additions resulting from acquisitions d) None of the above
through business combinations
10. How should an investment property be initially
3. What are the standards for investment measured?
properties? PAS 40 and PFRS 16 a) At its fair value
b) At its deemed cost
4. Under PAS 40, Investment Property, which c) At its cost
additional disclosure must be made when an d) None of the above
entity chooses the cost model as its accounting
policy for investment property? 11. Directly attributable expenditures related to
a) The present value of the property investment property include
b) The value in use of the property a) Professional fees for legal services, property
c) The net realizable value of the property transfer taxes and other transaction cost
d) The fair value of the property b) Startup costs
c) Initial operating loss incurred before the
5. Farming land is purchased for its investment investment property achieves the planned
potential. Planning permission has not been level of occupancy
obtained for building constructions of any kind. d) Abnormal amount of wasted material, labor
Is this an investment property? YES and other resources incurred in constructing
or developing the property
6. Which TWO of the following properties fall
under the definition of investment property and 12. Which statement is incorrect in determining the
therefore within the scope of IAS 40? fair value of an investment property?
a) Property occupied by an employee paying a) An entity shall determine the fair value of
investment property by deducting
market rent
transaction cost that may be incurred upon
b) A building owned by an entity and leased disposal
out under an operating lease b) The fair Value of investment property shall
c) Property being constructed on behalf of 3rd reflect market conditions at the end of the
parties reporting period
d) Land held for long term appreciation c) If an Office is leased on a furnished basis,
the fair value of the office generally includes
the fair value of the furniture because the
7. Which of the following assets can be classified
rental income relates to the furnished office.
as investment properties?
d) The fair value of investment property
a) Building leased
excludes prepaid or accrued operating lease
b) Unoccupied building
income.
c) Land
d) All of the above
13. Aninvestment property is derecognized when 22. Subsequent measurement of investment
a) It is disposed to a third party. property
b) It is permanently withdrawn from use.  Cost model or Fair value model
c) No future economic benefits are expected
from the disposal. 23. PAS 40 requires an entity to determine the fair
d) In all of these cases value of its investment property regardless of
the accounting policy used
14. If owner-occupied property is transferred to  TRUE
investment property that is to be carried at fair
value, the difference between the carrying 24. Under the fair value model, fair value is used
amount and fair value shall be for
a) Included in profit or loss  Measurement purposes
b) Included in retained earnings
c) Included in other Comprehensive income 25. Under the cost model, fair value is used for
d) Accounted for as revaluation of property  Disclosure purposes

15. If an inventory is transferred to investment- 26. PAS 40 requires the use of an independent
property to be carried at fair value, the valuer in determining the fair value of an
remeasurement to fair value is investment property
a) Included in profit or loss  FALSE,encourages only but does not require
b) Included in other comprehensive income
c) Included in retained earnings 27. Gains or losses arising from changes in fair
d) Accounted for as revaluation surplus value are recognized in
 Profit or loss
16. Which of the following disclosures shall be
made when the fair value model has been 28. Assets measured at fair value model are not
adopted? depreciated
a) Depreciation method used  TRUE
b) The amount of impairment loss recognized
c) Useful life 29. An entity used the principles in ____ when
d) Net gains or losses from fair value determining fair value of an investment
adjustments property
 PFRS 13: Fair Value Measurement
17. A land and/or building held to earn rentals or
for capital appreciation or both. 30. Transfers to or from investment property are
 Investment Property made only when there is
 Change in use
18. Investment property is qualified in the
consolidated FS 31. If entity uses cost model, transfers between
 FALSE, only in individual investment property, PPE and inventories are
accounted for at the ____ of asset transferred
19. If payment is deferred, the cost is the  Carrying amount
 Cash Price Equivalent
32. If entity uses fair value model, transfers
20. The difference between the cash price between investment property, PPE and
equivalent and the total payment is recognized inventories are accounted for at the ____ of
as asset transferred
 Interest Expense  Fair value

21. Gains and losses arises when asset received is 33. If an entity owns and manages a hotel, services
measured at carrying amount of asset given up provided to guests are a significant component
 FALSE of the arrangement as a whole. In such a case,
the hotel is classified
  Owner-occupied property
CFAS SELF-REVIEWER (PAS 41)
8. Agricultural activity is the management by an
1. Which of the following is most likely an entity of the biological transformation and
acceptable measurement for agricultural harvest of biological assets for
produce? a) Sale
 Initial: fair value less costs to sell b) Conversion into agricultural produce
 Subsequent: lower of cost and NRV c) Conversion into additional biological assets
d) A and B
2. Biological assets and agricultural produce are e) All of the above
recognized when all of the following are present
except 9. Which of the following does define “bearer
a) control plant”?
b) probable future economic benefits a) A living plant that is used in the production
c) probable future event or supply of agricultural produce
d) fair value or cost can be measured reliably b) A living plant that is expected to bear
produce for more than one period
3. Which of the following statements is incorrect c) A living plant that has a remote likelihood of
regarding the accounting for biological assets? being sold as agricultural produce, except
a) Agricultural land used in growing for incidental scrap sales
agricultural produce can never qualify for d) A and C
recognition as biological asset. e) All of the above
b) Biological asset is living animal or plant.
c) Agricultural produce is harvested product 10. When biological assets are physically attached
from a biological asset before any to the land and active market only exist for the
processing. combined assets
d) PAS 41 is used to account for both  Use the fair value of the combined assets
consumable and bearer plants. less fair value of the land and land
improvements
4. Which of the following is considered an
agricultural produce? 11. Initially measured at fair value less costs to sell
a) eggs to be hatched into chicks but later on the entity change to cost less
b) condensed milk accumulated depreciation less accumulated
c) dairy cow impairment losses
d) felled trees  CANNOT

5. Which of the following is considered an 12. Any changes in fair value less costs to sell
inventory rather than an agricultural produce at should be included in profit or loss for the
the point of harvest? period in which it arises
a) Harvested cotton  TRUE
b) Harvested cane
c) Tea 13. A biological asset shall be measured at
d) Picked leaves  Fair value less cost to sell

6. Which of the following shall IAS 41 be applied 14. An entity shall recognize a biological asset or
to? agricultural produce when and only when :
a) Bearer plants related to agricultural activity a) The entity controls the asset as a result of
b) Agricultural produce at the point of harvest past events
c) Land related to agricultural activity b) It is probable that future economic benefits
d) All of the above associated with the asset will flow to the
entity
7. Agricultural produce is the harvested produce of c) The fair value or cost of the asset can be
the entity’s biological assets. measured reliably
 TRUE d) All of these
CFAS SELF-REVIEWER (PAS 2) 10. It refers to the unnecessary and unusual
business activities of an entity.
1. It is “the estimated selling price in the ordinary a) Ordinary course of business
course of business less the estimated costs of b) Extraordinary course of business
completion and the estimated costs necessary c) Normal course of business
to make the sale” d) None of the above
a) Present Value
b) Fair Value 11. PAS 2 recognizes that a primary issue in the
c) Net Realizable Value accounting for inventories is the determination
d) Face Value of cost to be recognized as asset and carried
forward until it is expensed.
2. Fair value refers to the net amount that an  TRUE
entity expects to realize from the sale of
inventory in the ordinary course of business. 12. Cost formulas deal with the computation of the
 FALSE following except
a) Cost of sales
3. Net realizable value for inventories may equal b) Cost of ending inventory
fair value less costs to sell. c) Cost of beginning inventory
 FALSE d) Cost of goods sold

4. The amount of write-down is recognized as 13. PAS 2 permits the use of Last-In, First-Out
a) Asset (LIFO)
b) Liability  FALSE
c) Income
d) Expense 14. Cost formula used for inventories that are not
ordinarily interchangeable
5. If the cost of an inventory is $7 while its net a) Weighted Average
realizable value is $10 the amount of write- b) First-In, First-Out (FIFO)
down is $3. c) Specific Identification
 FALSE d) Last-In, First-Out (LIFO)

6. The best evidence of net realizable value for 15. The formula for the weighted average cost is
raw materials is ______ cost. total goods available for sale in pesos over total
a) Purchase goods available for sale in units
b) Conversion
 TRUE
c) Replacement
d) Storage
16. The weighted average may be calculated “as
each additional purchase is made” is also called
7. Reversals of inventory write-downs shall not
a) Moving forward average
exceed the amount of the original write-down.
b) Additional moving average
 TRUE
c) Moving on average
d) Moving Average
8. Which of the following does not belong to the
group?
17. Cost of inventories that are charged as expense
a) Abnormal costs
when the related revenue is recognized
b) Conversion costs
a) Purchase costs
c) Administrative costs
b) Conversion costs
d) Selling costs
c) Selling costs
d) Cost of sales
9. Conversion cost includes the import duties,
transport, handling and other costs directly
18. Inventories are measured at the ______ and
attributable to the acquisition of the inventory.
net realizable value.
 FALSE
 Lower of cost